GM Bets Big on Cadillac In Chinese Luxury Market, Expands Dealership Network

 
on April 23 2012 11:36 AM
The Cadillac 2013 XTS is unveiled at the LA Auto Show in Los Angeles, California, November 16, 2011.
The Cadillac 2013 XTS is unveiled at the LA Auto Show in Los Angeles, California, November 16, 2011. Reuters

General Motors Co. (NYSE: GM) will open 600 Chinese dealerships this year, almost 10 percent of which will be for the Cadillac brand, CEO Dan Akerson said Monday.

GM is making a big play in China, the largest global automotive market, and the company plans to expand its dealership network there from 2,900 last year to 3,500 by year's end, Akerson said at the Beijing auto show, according to the Associated Press.

Our dealers in China are experiencing strong growth, with some of them quickly becoming among the largest and best we have in the world, Don Butler, Cadillac vice president of marketing, said at the Beijing auto show.

Of the 600 new dealerships, 52 will be dedicated to the Cadillac brand, an increase of 76 percent, and almost a tenth of the total number of new dealerships. China is the second largest market for Cadillac, and sales of GM's luxury marque have been increasing dramatically since it entered the market in 2005. In 2011, more than 30,000 Cadillac brand cars were sold in China, an increase of 76 percent.

China is the second-largest market for Cadillac, and of course is one of the largest and strongest markets in the world for luxury cars, so it is a core part of our vision as a brand. It is projected that by the end of the decade, half of all luxury purchases in the world  -- all categories, not just cars - will occur in China, Butler said.

In addition to expanding its Chinese dealer network, GM announced plans to build the new 2013 Cadillac XTS luxury sedan with its joint venture partner Shanghai General Motors. While the 2013 Cadillac XTS is scheduled to launch in North America in late spring 2012, Chinese production of the car will begin in the fall.

Cadillac hopes to increase Chinese annual sales to 100,000 by 2016, Joseph Liu, executive vice president of GM China said, according to the AP.

GM overall seeks to increase production capacity in China to five million cars by 2016, Akerson said, an increase of almost 50 percent over 2011, the AP reported. GM is in the midst of completing a restructuring deal with its Chinese joint venture partner to restore an equal shareholding balance. GM sold 1 percent of the joint venture to Shanghai Automotive Industries Corp. in 2009 as part of its bankruptcy, giving the Chinese company a 51 percent stake. The 2009 sale reportedly cost $85 million.

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